By Pablo Triana
Pablo Triana is the author of Lecturing Birds On Flying: Can Mathematical Theories Destroy The Financial Markets? The views expressed are his own
Paul Volcker, the former Fed chairman whose nerves of steel broke the back of double-digit inflation 30 years ago, shows that he’s still one of the few in government that wants to call the tough shots. Too bad he isn’t more influential. If he were, I doubt Wall Street would be talking about getting back to business as usual.
In his speech, Obama emphasizes that big banks should take it upon themselves to give back to the community after the tax payer has done so much to put them on them on the road to recovery. While I agree with the point in theory, I’m not sure Wall Street is built to think about the moral imperative of creating a better society when it’s primary goal is to make money.
Investment banks are facing a big squeeze. For an industry that was generating record revenues just months after the collapse of Lehman Brothers, this may seem unlikely. But the revival looks set to be short-lived. Increased regulation and greater competition means the super-charged returns the industry generated for most of the past decade are likely to prove elusive.
Merging T-Mobile UK with Orange will bring 3.5 billion pounds of value to shareholders, and “substantial benefits to UK customers.” Goodness, why on earth didn’t they get together years ago? A merger that simultaneously enriches shareholders and customers is rare indeed, and one to be treasured – if this really is one of those seldom-seen beasts.
The Obama administration formally sent its plan for regulating derivatives to Capitol Hill today. And to no one’s surprise, the key proposal in the 115-bill is a plan to regulate “standard” derivatives on regulated exchanges of clearinghouses.